An encryption key is a software-based construct that controls transformation (i.e., encryption of data) between readable form and secure, non-readable form. One use of an encryption key is to encrypt data within a file prior to storing that file onto a disk drive. For example, a user may password encrypt the file so that only someone who knows the password may successfully read and decrypt the file from disk.
Another use of an encryption key is to encrypt a data transmission that passes over public network. For example, the Secure Sockets Layer (SSL) and Transport Layer Security (TLS) protocols allow for encrypted data transmissions across the Internet for applications such as online banking
Another use of an encryption key is in an authentication device such as a token which allows users to login or authenticate themselves to a particular server. Here, a key server stores/updates key assignments to users.